Where to Find the "Anti-Dollar" (Hint: It's Not Gold)

There’s a currency I think of as the “anti-dollar” that continues to appreciate against the US dollar.

Unlike gold, the “anti dollar” can be used to maximize other investments. I’ll reveal this currency in a moment.

But first, why would you want an “anti-dollar” in the first place?

The US has a multi-decade history of borrow and spend. Worse than that, it’s more extreme today than ever before. The government has to borrow about half of what it spends. And policy makers are printing money like crazy to “stimulate” the economy (even if they do give it fancy names like “quantitative easing”).

If there is more money but the same amount of things to buy with it, prices of the things go up, measured in money. This is inflation, and it shows up in different places at different times. Whether its food, gasoline or house prices.

This might sound a bit weird at first, but money has a price like everything else. Looked at in reverse, inflation means the “price” of money has gone down, when measured in “things.” Money has lost value. It buys less.

One way to protect yourself from inflation is to have investments in stronger currencies. These can be held as cash, bonds, stocks, or real estate. Where I live in Argentina, the locals keep their savings in dollars, because they keep their value better than Argentine pesos. Everything’s relative. But there are much stronger currencies than the US dollar.

A hedge fund trader who is a friend of mine recently described it to me as an “Asian version of the Swiss Franc”. This is a big compliment. Switzerland’s currency has been strong for decades, and is well known as a safe haven in times of trouble.

The reason that Switzerland, and now Singapore, have strong currencies is that these countries live within their means. While the US borrows and spends, these countries earn and save. This is how people get rich, and it’s the same for countries. No one got rich by spending money faster than they earned it.

In 2009, Singapore’s current account balance – the net money coming into or going out of the country – was a surplus of $26 billion. That was just behind Saudi Arabia, the world’s biggest oil exporter. By comparison, the US had a deficit of $420 billion!

Singapore has very low external debt. That means it owes very little to people overseas. Again this is the opposite of the US, which owes trillions to places like China, Japan and Saudi Arabia.

And foreign exchange reserves – the country’s rainy day piggy bank – work out at $40,000 for every man, woman and child.

In the future, Singapore has a crucial advantage over Switzerland. Switzerland sits in the middle of the “old continent” of Europe, which looks set for a decade of slow growth and stagnation.

But Singapore sits in the middle of Asia – in fact right on some of the busiest shipping lanes in the world. And Asia is home to 60% of the world’s population, and with many decades of fast economic growth ahead of it.

This means that over time the Singaporean dollar is likely to gain value against the US dollar. In fact over the past five years it’s gained over 23% in value, measured in US dollars.

That’s a really useful kicker to any type of investment. So I’m on the hunt for ways to profit from the Singaporean “anti-dollar”. You should be, too.

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About Rob Marstrand:

Rob Marstrand worked for UBS for 15 years, mainly in corporate strategy, before escaping the banking world and moving to South America. His ex-employer was the largest global wealth manager and world’s biggest stock trader. The strategy job involved all areas of the business in all parts of the world. Reviewing current businesses, developing entry strategies for new businesses and countries, and working on acquisitions and joint ventures. This work involved detailed review and valuation of competitors and takeover targets. Rob lived in Hong Kong, China from 2002 to 2005, where he was particularly involved in negotiating joint ventures and acquisitions in China. He has also worked on projects, acquisitions and joint ventures in Japan, India, Saudi Arabia, the US, Switzerland, Indonesia and South Korea, amongst others. He is British, married to an Argentine wife, and emigrated to Buenos Aires, Argentina with his wife and two children in 2008.